Greens, MP want mining tax toughened

By
Phillip Coorey

Oct. 26, 2012, 7:59 a.m.

The Greens and independents are demanding the government re-legislate to toughen the mining tax after revelations that not a single cent will be collected in the tax's first three months, threatening to blow away the budget surplus.

Greens, MP want mining tax toughened

Threatening to blow away the budget surplus ... the Greens and independents are calling for a tougher re-legislation for the mining tax.

The Greens and independents are demanding the government re-legislate to toughen the mining tax after revelations that not a single cent will be collected in the tax's first three months, threatening to blow away the budget surplus.

In a major embarrassment for the federal government, the Greens and the independent Rob Oakeshott, who supported the tax, yesterday backed longstanding claims by the opposition and the industry that the government was hoodwinked by the miners when it hurriedly renegotiated the tax in 2010 in between dumping Kevin Rudd and calling the election.

Mining industry sources have told the Herald they cannot say how much, if any, minerals resources tax they will pay this financial year.

One said the lack of mining tax revenue this financial year would pale against the company-tax shortfall. He said the revised estimates for company tax contained in Monday's midyear budget update were overstated.

The revelation also plays into the hands of Mr Rudd, who took a veiled shot at the Prime Minister, Julia Gillard, and the Treasurer, Wayne Swan, last week by expressing ''hope'' that the tax would make its forecast revenue and insinuating they had failed to stand up to the mining giants.

On Monday, as BHP Billiton, Xstrata and Rio Tinto informed the Tax Office they would pay no mining tax for the first quarter of this financial year, the midyear budget update downgraded the tax's forecast revenue from $13.4 billion over four years to $9.1 billion.

It downgraded the estimate for this financial year from $3 billion to $2 billion but the opposition said that estimate was fanciful and the midyear budget had been brought forward to avoid factoring in the bleaker picture.

The budgeted proceeds of the mining tax have already been spent on cost-of-living assistance for low- and middle-income earners, tax breaks for small business and compulsory superannuation increases.

''The surplus is gone,'' the shadow treasurer, Joe Hockey, said. ''I have never heard of a tax that doesn't raise a dollar.

''Even the most incompetent governments anywhere in the world would not introduce a tax that raises no money.''

Mr Swan said the first-quarter lack of revenue had been factored into the latest budget forecasts and should not be used to estimate the mining tax for the rest of the financial year.

He said it was a profits-based tax that made revenue when commodity prices and profits were high.

The tax applies to iron ore and coal. Coal prices were down and iron ore fell in recent months to its lowest price since the global financial crisis.

When the government renegotiated the tax, Treasury officials were excluded and the miners won concessions such as having all state royalties refunded and being able to deduct against their mining tax liability the market value of their current operations.

Mr Oakeshott, the Greens and others did not accept that low commodity prices alone were to blame and said the deductions needed to be pared back.

Mr Oakeshott said he suspected the government had been swindled, not just by the miners, but by the Resources and Energy Minister, Martin Ferguson, who led the negotiations to revamp the tax.